The proposed incentives policy in detail

My coverage last week of the city’s new incentives strategy for multifamily housing was abbreviated for print. Meaning, I only could highlight the revamped policy. Here it is in detail.

The City Council is expected to approve the policy on Thursday. I’m basically regurgitating a handout that was given to the Council members last week.

The reason the new policy has gained City Council consensus is two-fold:

1. Cash incentives are no longer an option.

2. Instead of the city and developer negotiating on the amount — which could take months — it’s based on a formula. This, in effect, makes the process predictable, transparent and streamlined.

Projects now are eligible for fee waivers (SAWS and city), real property tax reimbursement grants and loans. Projects that are eligible can be apartments or condominiums and they must be located within the Inner City Reinvestment / Infill Policy area.

Here’s how it breaks down:

Inner City Incentive Fund Loan

Within the ICRIP are four targeted areas that would be tiered, meaning, depending on the projects location the loan amount fluctuate:

• Tier 1: Urban core; $3,000-$6,000 per unit
• Tier 2: Near River South, HemisFair/Chavez, near East Side, near West Side, government district and medical district (northwest downtown); $1,500-$3,000 per unit
• Tier 3: River North (ends at U.S. 281); $1,000-$2,000 per unit
• Tier 4: Midtown (north of River North); $500-$1,000 per unit

The city hopes this kind of disbursement adds geographic balance.

They must also meet one of the following categories:

• Mixed income
• Community use
• Adaptive reuse
• Brownfield redevelopment
• Historic rehabilitation
• High-rise
• Student housing
• Development within a quarter-mile from the West Side Multimodal Center or the Rover Thompson Transit Center

The developer could receive a bonus of $1,000 per unit if the project includes structured parking, and $500 per unit for green aspects like rain gardens or bioswales. The bonuses would stay fixed and not fluctuate depending on the tiers.

The interest on these loans would compound annually and the developer would have to make a balloon payment in the seventh year.

Mixed Use Forgivable Loan

Developers of mixed-use projects would be eligible for $20 per square foot of retail and $10 per square foot of office space. Twenty percent of the entire amount would be forgiven annually over a five-year period as long as the space is leased and the tenant uses the funding toward the space.

Fee Waivers

Certain city fees are waived under the ICRIP policy, already. But the cap for SAWS impact fee waivers — currently $500,000 — would be removed. The $2 million in available funds for such waivers would not increase.

Real Property Tax Reimbursement Grants

The increase in taxable value of the property is the source of these grants. They are available for 10 years if the project is located in the ICRIP. Or, a 15-year agreement if it fell within one of the aforementioned tiers, or was an adaptive reuse, a Brownfield development or rehab of a historic structure. A requirement of these grants would be that 10 percent of the units stay at the initial rental rate (adjusting for inflation, only) for the duration of the abatement.

So now what?

This policy is just a part of an overall action plan for downtown by national consultants HR&A, commissioned by the city and nonprofit organization Centro Partnership. The overall plan covers transportation, infrastructure and regulating hotel development in the outlining areas of downtown.

Consider the incentive policy as the city’s primary weapon, but there are other aspects of the overall plan. For example, the city wants to craft master plans for various parts of downtown, like it’s done with HemisFair Park. It’s also going to establish design guidelines to prevent awful buildings from happening. In late March, I outlined the plan; click here to read it.

The goal is to add 7,500 more housing units to the downtown area by 2020. Currently, it estimates there are 7,000 residents living in the center city — which is city jargon for downtown proper and then 2-3 miles north from there, maybe two miles south, maybe a mile east, and to Frio Street. (There sure as hell aren’t 7,000 people living among the tall buildings.)